Janus Henderson Global Sustainable Equity Strategy

Transcription

1 For promotional purposes. This document is solely for the use of professionals and is not for general public distribution. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Janus Henderson Global Sustainable Equity Strategy London Active Summit 2018 Hamish Chamberlayne Head of SRI, Portfolio Manager

2 Learning objectives > > > Understand the myths and realities surrounding responsible and sustainable active funds Be able to compare and contrast the features of our responsible and sustainable global funds Be aware of how responsible and sustainable funds are positioned in the wider market today and how they can lead the response against passive 1

3 Specialist, global ESG funds are at the cutting edge of the active industry Hamish Chamberlayne, Head of SRI, Janus Henderson Investors Responsible and Sustainable Investing London Active Summit 2018 Agenda 1. Myths & realities separating fact from fiction 2. Our investment approaches principled but not inflexible 3. Fund positioning are all responsible and sustainable funds the same? 4. Case studies - just how rich is our investment universe? 5. Our mission heritage, innovation and performance all count 2

4 Philosophy Janus Henderson Global Sustainable Equity We believe the best investment returns will be generated by companies which are providing solutions to environmental and social challenges These companies should have attractive financial attributes, such as persistent revenue growth and durable cash flows, as well as exhibit strong management of ESG risks We aim to outperform the market over the long-term through creating a differentiated global equity portfolio of the best sustainability ideas with a favourable risk profile Our investment approach is explicitly low carbon 3

5 Janus Henderson Global Sustainable Equity Strong investment framework designed to generate long term performance Janus Henderson is a trademark of Janus Henderson Investors. Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. 4

6 Sustainability as an investment strategy Alignment of sustainability and key investment trends Energy Efficiency Financial Services Smart Cities Education & Research Industry 4.0 Risk & Security Cloud computing & Artificial Intelligence Sustainability and Investment trends Water as the new Oil Healthcare Electrification of Transport Digital Energy Recycling Sustainable Infrastructure Wellness 5

7 Our investment inputs Breadth and depth of expertise Oversees the development, management and implementation of the avoidance criteria Ethical Oversight Committee Global Research Platform 35 global sector specialists Average of 16 years of financial industry experience Global Research Platform GRI Governance & Responsible Investment (GRI) Provides analysis of material ESG issues and company engagement Portfolio Risk & Analytics and Investment Risk teams Provide investment risk management and oversight Risk Management SRI Team Vigeo Eiris Vigeo Eiris ESG rating and research agency 146 analysts Average of 7 years of financial industry experience MSCI ESG, RepRisk Sell side research Third Party Research 6

8 Recognising the cost of economic externalities More than $20 trillion of negative impact on global prosperity Estimated annual global direct economic impact associated with selected global burdens Share of global GDP, 2014 Violence and armed conflict Biodiversity and ecosystem impact Smoking Obesity Corruption Alchoholism Illiteracy Antimicrobial resistance Congestion costs Illicit financial flows Food waste Climate change 3.1% 2.8% 2.7% 2.0% 1.9% 1.8% 1.6% 1.6% 1.4% 1.3% 1.3% Dimension Environment Governance Social Future trend 9.1% Source: The report of the Business & Sustainable Development Commission 2017; WHO Global Burden of Disease database; McKinsey Global Institute; AlphaBeta analysis 7

9 Avoidance criteria Not investing in businesses involved in activities contrary to the development of a sustainable economy and therefore at risk of disruption or regulation People Environment Animals Alcohol Fossil fuel extraction & refining Animal testing Armaments Fossil fuel power generation Fur Gambling Chemicals of concern Genetic engineering Pornography Contentious industries Intensive farming Tobacco Nuclear power Meat & dairy production All holdings compliant with UN Global Compact 8

10 Structural deflation in energy markets? Oil is an expensive source of energy USD/bbl Average breakeven Onshore Middle East 25 Offshore Shelf 40 Deepwater Onshore Row NAM Shale Extra Heavy Oil Onshore Russia Ultra Deepwater Total 2020 liquid production, million boe/d Cost curve 88 Oil sands Oil price crash 2mbpd US gasoline US electricity Utility solar/wind Source: Janus Henderson Investors, Rystad Energy research and analysis, Redburn, as at December

11 The low carbon transition will impact multiple sectors Up to 5 trillion of MSCI World market capitalisation at risk of disruption Coal Oil & gas Oil services Power generation Shipping Trucking Auto manufacturers Auto suppliers 10

12 Environmental and social themes in practice Investing in businesses that have a positive impact on the development of a sustainable global economy Environmental Social Cleaner Energy Boralex Panasonic Solaredge Efficiency IPG Photonics Schneider Electric Nidec Environmental Services Avery Dennison DS Smith Sustainable Transport Aptiv TE Connectivity Tesla Water Management AO Smith Evoqua Water Tech Xylem Knowledge and Technology Adobe Systems Texas Instruments ASML Health Capital Senior Living Encompass Health Humana Safety Progressive Legrand Shimadzu Sustainable Property and Finance AIA Marsh & McLennan Visa Quality of Life Gildan McCormick Nike Source: Janus Henderson Investors, as at 31 March 2018 Note: The above example is intended for illustrative purposes only and is not indicative of the historical or future performance of the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position in the securities mentioned in the report. References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security. Past performance is not indicative of future results. 11

13 Portfolio characteristics Sector and regional breakdown Sector weights relative to MSCI World (%) Regional weights relative to MSCI World (%) Information Technology Industrials Cash Real Estate Telecommunication Services Materials Utilities Consumer Discretionary Health Care Financials Energy Consumer Staples Source: Janus Henderson Investors, as at 30 June 2018 Note: Based on the Janus Henderson Global Sustainable Equity Fund Totals may not add up due to rounding or cash levels Sector weights based on GICS Cash North America Emerging Markets Japan Europe Ex UK UK Pacific Ex Japan

14 Portfolio characteristics Active share: ~93% Market cap breakdown (%) 45 Janus Henderson Global Sustainable Equity Fund MSCI World > 100bn 50bn 100bn 10bn 50bn 5bn 10bn < 5 bn Source: Note: Janus Henderson Investors, FactSet, as at 30 June 2018, in GBP Benchmark is the MSCI World 13

15 Investing in companies providing solutions to environmental and social issues A rich and diverse universe of companies building the future economy The above example is intended for illustrative purposes only and is not indicative of the historical or future performance of the security. Janus Henderson Investors, one of its affiliated advisors, or its employees, may have a position in the securities mentioned in the report. References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security. Past performance is not indicative of future results. 14

16 Janus Henderson Global Sustainable Equity Sources of alpha Thematic investment framework Investing in companies which are growing sustainably Low carbon Avoiding investment in fossil fuels and other companies which stand to be disrupted by the transition to a low carbon economy Disciplined research Following a disciplined fundamental analytical process which incorporates both financial and ESG considerations A core global equity strategy 15

17 Sustainability has been a winning investment strategy Fund A Fund B MSCI World MSCI World Energy MSCI EM Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 CUMULATIVE TOTAL RETURNS 5-YEARS TO END AUGUST 2018 IN GBP Sources: FactSet, MSCI (all gross of fees and excluding intraday trading impact) Past performance is no guide to future returns 16

18 Appendix

19 Fund profile General characteristics Inception date 7/31/1991 Strategy assets 744 Million Investment guidelines and risk parameters Holdings range Expected turnover <30% Sector limit Unconstrained Regional Allocation Benchmark aligned Benchmark MSCI World Beta Approx ~1.0 Cash levels 1-3% Position limit <3% active (generally %) Active Share ~93% Source: Janus Henderson Investors, as at 30 June

20 Portfolio characteristics Top 10 holdings Portfolio allocation by theme Theme % Knowledge & Technology 28.4% Sustainable Property & Finance 15.8% Efficiency 11.4% Sustainable Transport 11.3% Health 10.3% Safety 6.9% Water Management 6.0% Quality of Life 4.8% Environmental Services 3.4% Cleaner Energy 1.7% Stock Theme Weight (%) Microsoft Knowledge and Technology 4.5 Adobe Systems Knowledge and Technology 3.3 ASML Holding Knowledge and Technology 2.9 Visa Sustainable Property and Finance Humana Health 2.6 DS Smith Environmental Services 2.4 TE Connectivity Sustainable Transport 2.4 Encompass Health Health 2.3 Texas Instruments Knowledge and Technology 2.3 Progressive Safety Source: Janus Henderson Investors, FactSet, as at 30 June 2018 Note: Based on the Janus Henderson Global Sustainable Equity Fund References made to individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security 19

21 A low carbon global equity strategy Portfolio carbon footprint 80% less than MSCI World and no investments in fossil fuel companies Portfolio carbon footprint Scope 1 & 2 apport tco2e 1 Portfolio MSCI World Thousands tco2e Source: Janus Henderson Investors, as at 30 June ISS Climate Impact data including Scope 1 (direct), Scope 2 (purchased electricity) Note: Provided for informational purposes only and is not a recommendation to buy or sell Carbon Neutral certification for Janus Henderson Investors 20

22 Integrated team of investors and ESG analysts Global Equity SRI Team Governance and Responsible Investment team Hamish Chamberlayne Head of SRI Aaron Scully Assistant Portfolio Manager Antony Marsden Head of GRI George Birch Analyst, GRI George Crowdy Investment Manager Ama Seery Analyst, ESG Olivia Gull Analyst, GRI David Ray Analyst, GRI Source: Janus Henderson Investors, as at 30 June

23 Investment process Disciplined and repeatable investment framework designed to select best sustainability ideas globally, and construct a well diversified portfolio Investment screening global stocks Investment universe ~ 800 stocks Best ideas/ watch list ~ 120 stocks Portfolio stocks Sustainability Themes Avoidance Criteria Market Capitalisation Liquidity Growth Strategy Competitive Analysis Operational Quality Fundamental Research ESG Financial model Balance Sheet ROIC Carbon emissions, CDP, Energy efficiency, Culture, Diversity, Employee growth, Management remuneration, Inside ownership, Controversies ESG considerations integral to investment analysis and portfolio management Valuation Portfolio fit Risk diversification Measure ESG outcomes Company engagement A sustainability focused investment framework 22

24 Investing in an age of disruption Near term valuation metrics not always a good guide to long term investment returns Cashflow Cashflow Profitable Growth Value traps, disruption risk Time Cashflow Cashflow High investment, High growth Time Expensive defensives Time Time High PE stocks have outperformed low PE stocks over

25 Portfolio attributes: Financial Targeting companies with sustainable financial characteristics Portfolio Style Skyline 3 Skyline Tilt Weighted Average Returns (%) FCF Yield EBIT / EV IBES ROE 3 Year Sales Growth Sustainable Growth Low Gearing FCF Yield EBIT / EV IBES ROE 3 Year Sales Growth Sustainable Growth Gearing Portfolio Benchmark Source: Style Research, as at 30 June 2018 Note: Portfolio is the Janus Henderson Global Sustainable Equity Fund, benchmark is the MSCI World both in GBP 24

26 Janus Henderson Investors Business overview AUM by capability AUM by client type AUM by client location 17% 13% 21% 52% 9% 5% Equities 16% Fixed Income Quantitative Equities Multi-Asset Alternatives 39% 44% Self-directed Intermediary Institutional 32% 52% North America EMEA & LatAm Asia Pacific Key statistics $ 370.1B 280.3B 317.0B Assets under management More than 2,000 Employees worldwide 28 Offices worldwide 9 Fund manager average years at firm 20 Fund manager average years financial industry experience Source: Janus Henderson Investors as at 30 June AUM excludes Exchange-Traded Note ( ETN ) assets. 25

27 Janus Henderson Investors 201 Bishopsgate, London EC2M 3AE Tel: Fax: Important information This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution. Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment application will be made solely on the basis of the information contained in the Prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the prospectus, and where relevant, the key investor information document before investing. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes. Important information Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited (reg. no ), Henderson Global Investors Limited (reg. no ), Henderson Investment Funds Limited (reg. no ), AlphaGen Capital Limited (reg. no ), Henderson Equity Partners Limited (reg. no ), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. 2018, Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. G:\Dist\Glob\BS\Pres\Ad-hoc\Janus Henderson GSE London Active 2018 WS.pptx 26